Japan’s Energy Policy Still Murky Three Years After Fukushima

04/01/2014 | Sonal Patel

The administration of Japanese Prime Minister Shinzo Abe in late February announced details of its first draft energy policy since the Fukushima crisis three years ago, and it suggests that nuclear power, along with renewables and fossil fuels, will be integral to meeting the resource-poor nation’s energy needs.

The draft does not specify an exact mix, alluding to the uncertainty posed by an unknown number of reactor restarts—all the country’s 48 existing reactors remain shuttered for new safety standards checks—and the wavering pace of renewable energy development. Notably, the plan says Japan will determine the size of its nuclear fleet after taking into account its future energy needs, as well as its carbon commitments. That doesn’t eliminate the possibility that the government will endorse new nuclear builds, experts observe.

Still, the plan has a decidedly greater renewables emphasis compared to recommendations on the plan late last year from the Strategic Policy Committee of the Advisory Committee for Natural Resources and Energy, which is the expert panel tasked with formulating the Basic Energy Plan. The Cabinet had postponed its decision on their recommendations due to the Tokyo gubernatorial election.

Media reported that the Cabinet could endorse the new February-released plan this March. In a press conference on Feb. 20, however, Japan’s chief cabinet secretary said the government’s backing of nuclear as an “important base-load power source” in the plan was not decided, despite what was being widely reported. He also noted that no definitive deadline had been set to finalize the “extremely important subject that is directly related to economic activities,” and that the government “will proceed carefully.”

Japan’s future energy policy will pivot on political weight, as the government and ruling parties have differing opinions about the future of nuclear power. But the landslide victory of former Health, Labour, and Welfare Minister Yoichi Masuzoe in the high-profile Tokyo gubernatorial election this February, defeating major candidates who had called for the immediate elimination of nuclear, is telling of what the final plan could look like, observers say.

Others note that the nuclear problem won’t be Japan’s only focus in the new plan. Advisory panels are expected to discuss oil, natural gas, coal, renewables, and energy efficiency policies as they apply to stable supply and environmental measures. One emphasis will certainly involve strategies involving resource procurement. With Japan’s energy import bills surging since Fukushima, the country had a record trade deficit in 2013.

According to Yuhji Matsuo and Yuhji Yamaguchi of the Institute of Energy Economics of Japan (IEEJ), the total cost of power generation for the country’s 12 general and wholesale electric utilities increased from¥7.5 trillion in 2010, before Fukushima, to¥9.6 trillion in 2011 and¥10.6 trillion in 2012. The bulk of the increase was soaring imported fuel costs for thermal power generation—particularly natural gas and fuel oil (Figure 2)—which almost doubled in the two years from 2010 to 2012 (from¥3.7 trillion in 2010 to¥7.3 trillion in 2012). The IEEJ researchers note that costs have been offset somewhat by the currency exchange rate and a drastic decrease in electricity consumption.

2. Rising costs in the absence of nuclear. Fuel costs for thermal power generation for Japan’s 12 general and wholesale electric utilities rose sharply between 2010 and 2012, almost doubling as the cost of purchasing natural gas and fuel oil soared. Source: IEEJ

The soaring costs have pushed Tokyo Electric Power Co. (TEPCO) and eight other general utilities deep into the red. The companies had posted net profits of¥200 billion to¥400 billion each year (except in FY2008, when oil prices soared)—even in FY2010, after losses from the Great East Japan Earthquake were reported and when Fukushima Daiichi owner TEPCO suffered a net deficit (of¥1.3 trillion). But over the following two years, all eight companies have registered huge net losses—a combined¥800 billion, estimates the IEEJ.

—Sonal Patel, associate editor(@POWERmagazine, @sonalcpatel)

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